asia healthcare opportunities 2011 and beyond

Coming Challenges for Healthcare in Asia

Potential Opportunities 2011 & Beyond

May 2011

1

Framework of Report

2

Provide Overview & Key Logic of Report Leading to Options

Section One- Challenges Facing Global Healthcare

Section Two- Future Scenarios for Asia’s Healthcare Industry

Section Three- Assessing Partnership Opportunities

Detailed Agenda of Report

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� Global Healthcare Faces Pressure from Triple Conver gence � Trend 1 : Ageing World Populace � Trend 2: Rising Global Healthcare Costs � Trend 3: Unequal Distribution of Healthcare Capabil ities

� Multiple Impact on Global Healthcare � Impact 1: Nature of Services � Impact 2: Global Healthcare Industry � Impact 3: Healthcare Industry Sectors

� Healthcare Spending: Large Differences, Unequal Res ults � Case Study: US Healthcare System

� Rise of Healthcare Consumers

Provides background to key forces challenging globa l healthcare

Convergence Creates Undue Challenges on

Global Healthcare System

• Opportunities for Global Public & Private Sectors Drive to Create Innovative Solutions to Bring the Global Healthcare System back to Equilibrium (?)

Triple Convergence

Global Healthcare Faces Increased Pressure from the Triple Convergence of Major Trends ..

Global Health-

care 2050

Trend One: Ageing World

Populace

Trend Two: Rising Global

Healthcare Costs

Trend Three: Unequal Distribution

of Healthcare Capabilities

Globally number of people aged 60 years or older will reach 2

billion by 2050

• Old-age dependency ratios will increase significantly as the number of elderly increases and the working-age populations decline

• Europe will witness the highest old-age dependency ratios at 48% vs Asia with a relatively younger population at 27% (i.e. ratio of aged population vs working-age population)

Shifts in Population Pyramids

Developed Nations

Less-developed Nations

Old-age Dependency Ratios in Global Regions

Trend 1: Ageing World Populace Results in Signific ant Shifts in Global Demographic Profiles…

Source: UN 2007

Source: UN 2007

Trend 2: Rising Global Healthcare Costs Expected to Continue in Coming Years Albeit at Lower Growth rate

2010- Medical Costs in 95% of

Countries Exceeded Inflation

• Two most significant factors driving Healthcare costs increase are new medical technologies and the overuse of care.

• Expectations of medical cost trend over the next 5 years

Upwards Costs Trend Expected Major Factors Driving Medical Costs

Source: Towers Watson Global Medical Trends Survey of Health Insurers 2010

• Significant factors driving medical costs per person

Source: Towers Watson Global Medical Trends Survey of Health Insurers 2010

Trend 3: Unequal Distribution of Healthcare Capabil ities from Developed to Emerging Nations..

Gaps Emerging in Healthcare

Capabilities Across the Globe

• Developed nations confronted with demands on public pension & healthcare; emerging nations faces under-developed health insurance & shortage of trained healthworkers

Access to Medications & Technology Structural Shortfall -Trained Health Workers

Advanced drugs treatment beyond reach of poorer healthcare systems-

substitute generics with poorer efficacy. However major drug patents

expiring 2015

Expensive modern diagnostic systems unavailable to most nations

• Structural mismatch- emerging nations with young populace but lacked trained talent vs developed nations faced w limited workforce

Source: WEF Report 2010


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Impacting National Systems to Private

Healthcare Providers

• Driving increased National Healthcare spending and changes in healthcare service demands & delivery

Multiple Impact Across Global Healthcare Value Chai n – from Public Health Systems to Healthcare Industry

Convergence of

TripleTrends

• • - Increased GDP allocation to national healthcare

• - Drive for system integration •

• - Changes in demand for healthcare services • - Shift in provision of healthcare services

• - Geographic shift in location of healthcare players • - Consolidation/growth in different healthcare

sectors

Public Healthcare Systems

Global Healthcare

Industry

Healthcare Industry Sectors

Increased share Of GDP Allocation to Healthcare Across

Nations

• Developed economies will see 30%-50% increase in Healthcare’s share of GDP by 2050; Emerging countries similarly spending significant sums to build national systems

Impact 1: Public Healthcare Systems Allocated Incre ased Budget and are Focused on Integration

Increased Public Spending on Healthcare Integration of Healthcare Delivery

• Projected Increase in Public Spending on Healthcare in Developed Nations in 2050

Source: World Economic Forum -Pensions & Healthcare 2030 Scenario Report

• Priority more for developed nations rather than emerging healthcare systems

Source: KPMG Report 2010

Burden of Chronic Diseases

due to Aged Populace

• Major Chronic diseases that now accounts for 60% of all deaths & 43% of global disease burden will rise to 73% and 60% respectively by 2020

Impact 2A: Global Healthcare Industry Faces Changes in Nature of Services Required

Top 3 Upcoming Chronic Diseases Change in Kind of Healthcare Required

• Top 3 conditions causing highest prevalence of claims over next 5 years

Source: Towers Watson Global Medical Trends Survey of Healthcare Insurers 2010

Treatment of upcoming Chronic diseases i.e. cancer, cardio is expensive & requires

new medical resources, higher cost medication, etc

Shift from acute care to a “continuum of care” as mortality rates improves and

patients suffering from chronic diseases require extensive hospital care

Advances in Technology & Devices Shifts

Service Provision

• Advancements in wireless, device technology allows patients to enjoy in-home monitoring supported by a call service center or online communications platform

Impact 2B: Global Healthcare Industry Faces Shifts in the Provision of Services

mHealth Potentially Disruptive In-Home Monitoring/ Online Healthcare

• With the growth of smartphones and availability of connected devices , an era of eHealth or mHealth is emerging – “provision of health services and information vis mobile technologies”

• In-home monitoring provides best of both worlds: comfort of staying home with security of daily monitoring and proper medical attention. Allows preventive care & reduces emergencies.

Increasing Demand from Asia Driving Focus of Global

Healthcare MNCs

• China expected to become 2nd largest Pharma market by 2015 with market valued at US$103 billion; also significant increase in new drug R&D

Impact 3: Global Healthcare Industry Focuses on Gro wth in Asia

Healthcare Reforms & Investments Migration of Global R&D

• RMB 850 billion investment to improve healthcare delivery infrastructure- drives demand for medical devices & systems

• China’s CRO Market forecast to grow significantly

Source: MOH Source: Goldman Sachs; Healthcare CROs


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Healthcare Spending – Large Differences but Unequal Results

Higher Spending on Healthcare does not necessarily prolong

lives

• Exposes inefficiencies in respective nation’s healthcare spending and policies; additional spend has opportunity to be better allocated for improved services

Healthcare Spend vs Life Expectancy

81 81 76 80 79 73 78 80 80 78

• Based on 2007 OECD Health spend Data: Comparison of per capita healthcare

Life Expectancy In Years

Case Study: US Healthcare Costs Breakdown Shows Ex cessive Spend on Out-patient care, Admin and Medical Goods. .

US per capita Healthcare cost 2X Compared to

Developed Nations

• Reduction of US Healthcare costs…

Analysis of US and Selective Developed Nations 2007 Healthcare Cost Breakdown

Source: OECD and CIA factbook

Breakdown into 3 Major Healthcare Cost Components


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Consumers Increasing Desire to Manage Healthcare

Needs

• Consumers in Developed Nations Seeking Information, Comparing Services & Increasingly Willing to Travel to seek Lower-cost or Higher quality Healthcare

Rise of Healthcare Consumers Open New Opportunities and Non-Conventional Approaches to Meeting Healthcare Need s..

Access to Information for

Decision

Tools & Services to

Manage

Embrace Non-

traditional. Options

Future “Savvy”

Healthcare Consumers

Consumers want access to info from hospitals, doctors and health plans; to better understand providers and

pricing for healthcare service

Consumers use tools that can provide personalized

recommendations for improving health & disease management

Consumers interested in home or self-monitoring devices; alternative

treatment regimes i.e. TCM; travel to seek better healthcare

• Online medical database • Online scheduling • Doctor-patient X-change platform

• Online healthcare programs • Nurse call lines • Online claims management

• Home Monitoring Devices • Homecare network • Medical Tourism

Consumer Objectives New Services

Framework of Report

20

Provide Overview & Key Logic of Report Leading to Options





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� Healthcare in Asia at Unique Cross-road � Ideal Conditions to Build World-class Healthcare In dustry

� Condition (1): Young Populace � Condition (2): Strong Private-Public Collaboration � Condition (3): Increasing Healthcare Demand

� Asia’s Role in a Globally Integrated Healthcare Sys tem � Scenario (1): R & D � Scenario (2): Healthcare Service Delivery

� Asia- the World’s Largest Medical Tourism Destinati on � Drivers of Outbound Medical Tourism � Fundamental Factors Favoring Growth

Layout scenarios for healthcare in Asia due to glob al changes

Opportunity for Asia to Leverage on Global Healthcare

System

• Healthcare in Asia to grow from low-base and can leverage on Global Healthcare partnerships to build world-class healthcare services

Healthcare in Asia at Unique Crossroads – Leverage Global to be World-class

Characteristics of Healthcare in Asia

Young Populace & Low Old-age Dependency

Relatively Low Demand for Expensive Healthcare

Poor Healthcare Insurance & Provider Coverage

Low-tech Medical Equipment & Generic Drugs

Global Healthcare Partnership Opportunity

Increasingly Wealthy Asian

Populace Demand Better Healthcare


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Young Populace Provides Talent Pool

For Healthcare Workforce

• As developed nations face a shrinking and increasingly costly workforce, the young populace in Asia offers an alternative source of trained healthcare workforce

Ideal Conditions to Build World-class Service (1) – Young Populace Provides Pool for Healthcare Workforce

Transforming Asia’s Talent Pool

• Pool for Medical Professionals- Doctors + Nurses

(Philippines & Indonesia already provide pool of trained nurses; Singapore, Malaysia & HK have strong medical talent pool)

Partnerships with Nursing Institutes

• Pool for Medical Equipment Operators; medical researchers

Global Medical Facilities Collaborate w Local Institutes

Global Healthcare MNCs invest in training

• Pool for Outsourced Medical Admin & Services- Call-centers; database admin

(India & Philippines already building significant pool)

Global Pharma’s outsourced R&D

Govts in SE Asia Investing heavily in

Healthcare Infrastructure

• Following Govt investments; Private sector players have also committed significant capital expenditure to the overall healthcare service infrastructure

Ideal Conditions to Build World-class Service (2) – Strong Public-Private Collaboration

Private Sector Healthcare Investment Key driver is impending

liberalisation of services sector by 2015 under ASEAN agreement

Private hospitals across region diversifying service portfolio to

offer broader healthcare services

Presence of several large healthcare groups- Parkway (SG),

Bangkok Dusit (TH), Sunway Medical (MY)

Source: WHO 2010

SE Asian Governments records the highest private healthcare expenditure of any region at 63% of total health expenditure

Strong Demand Driving

Improvements to Service

• Increasingly discerning domestic consumers and need to cater to global consumers due to medical tourism driving providers to innovate in order to position as world-class providers

Ideal Conditions to Build World-class Service (3) – Strong Healthcare Demand

Medical Tourism by Country 2009 Medical Industry contributes over

US$80billion to Singapore GDP and is a significant service sector

Thailand’s medical tourism generates US$940million and

continues to grow strongly

Other SE Asian countries Malaysia and Vietnam are targeting to grow

this sector

Source: Deloitte, Josef Woodman Oct 2009

Five Countries Most Visited for Medical Treatments


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Asia’s Role in a Globally Integrated Healthcare Sys tem – R&D 2050

Asia- Hub for R&D Outsourcing +

Medical Device Production

• R&D includes drug development as well as production of medical devices & IT systems; with majority of activities focused in Asia where manpower/production costs are low

Identify Drug Tgts

Identify Drug Tgts

Drug Discovery

Identify Drug Tgts

PreClin+ Clinical

Med. Device R&D

Med. Device R&D

Med. Device R&D

Healthcare IT software



Drug Discovery

US EU CHINA

INDIA


Med. Device Production

PreClin+ Clinical

Asia’s Role in a Globally Integrated Healthcare Sys tem – Service Delivery 2050

Asia – Hub for Selective Surgery+

Aged Hospice Care+ Service Support

• Network covers Admin, Database Mgt, Service Centers Comms with Medical experts, Outpatient and in-patient care; Asia focus on In-patient care & aged Hospice services

Comms Plt w Medical Experts

US EU ASIA

INDIA Online

Healthcare Program

Call Center Support

In-Patient Care

(Medical Tourism)

Aged Hospice Service

(Retirement Homes)

Comms Plt w Medical Experts

Online Healthcare Program

Home-based Health

Monitoring

Emergency Service Centers

In-Patient/ Out-Patient care

*

*

Online Medical Database


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Asia- World’s Largest Medical Tourism Destination

Potential Global Medical Tourism Market of US$100

billion in 2010

• Asia well-positioned to continue on strong growth projections in the market- as even more Asian-based destinations enter the market i.e. China, Vietnam, Taiwan

*

Partnerships with Leading US-based

Medical Institutions

Profiles of Leading Asian Healthcare

Providers

Consumers Travel to Seek Lower Cost + Quality & Safe

Healthcare

• Industry initially driven by high cost of healthcare in the US and Outbound US Tourists; Demand from regional countries increasingly important

Medical Tourism in Asia- Drivers of Outbound Medica l Tourism

Comparative Costs for Selected Surgeries

Source: American Medical Association

Costs in Asia are significantly lower than the US

Outbound Travellers to Asia for Medical

UK Inefficient domestic healthcare service and introduction of medical tourism insurance

driving growth. Preferred destination: India

US Seeking lower cost healthcare, over 750K US residents travel annually for medical tourism.

Preferred destination: Thailand

Within Asia Regional travellers taking advantage of cheap flights and higher quality service-

Indonesians, Chinese, Japanese

Asia has Strong Foundations to

Support Medical Tourism Growth

• Strong mix of medical destinations and development of overall tourism infrastructure to support medical tourism growth; offers combination of medical + holiday

Medical Tourism in Asia- Fundamental Factors Favors Growth

Fundamental Factors Strength of Leading Destinations

Thailand Pioneer & leader industry leader with established reputation. In 2009; 1.4 M

medical tourists generating US$2 billion

Singapore Over 600K medical tourists generating

US$1.4billion with reputation for high quality and advanced care

India & Malaysia Emerging with over 450K & 300K tourists

respectively. Attractive to regional consumers

High Quality of Service Associated with Asian Culture

Attractive Holiday environment- for Post-surgery Recovery

Availability of Alternative Medicine/Treatment

Framework of Report

35

Describe framework and criteria in assessing opport unities





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� Framework and Criteria for Assessing Partnership Op portunity � Criterion for Screening Healthcare Cluster

� Ranking of Potential Healthcare Cluster Opportunity � Recommendations for Shortlisted

Describe framework and criteria in assessing oppor tunities

Framework and Criteria for Assessing Target Sites for Partnership Opportunity

Opportunities will Undergo Two

Levels of Screenings

• Screened to ensure Opportunities meet Healthcare Cluster as well as Eco-city Development Criteria before Financial Modeling for Investment Return

Shortlist HC Sites

Potential Healthcare

Cluster Sites

HC+ Eco Ready Sites

Screened for Healthcare

Cluster Criteria

Screened for Eco-City Criteria

Screened for Investment

Return

* In this paper screening for this criterion list shall only be done at the Country level.

Potential

Opportunities

Criterion for Screening Healthcare Cluster Capabili ties for Target Site

Healthcare Cluster as the Core

Economic Theme

• Healthcare Services as the Core Cluster must drive sufficient economic activity to support & sustain the development of an integrated urban city

Healthcare Cluster Components

Criterion for Screening Healthcare Cluster Capabili ties for Target Site

Criteria Assessed Capabilities Govt Public HC Funding L M H HH

Supporting Policies L M H HH

HC Insurance Coverage L M H HH

External Assistance (NGO) L M H HH

Regulatory L M H HH

HC Industry Market Value L M H HH

Growth L M H HH

HC Technology Platform L M H HH

HC Delivery Infra L M H HH

HC Comp Competitiveness L M H HH

HC Supply Chain L M H HH

HC R&D L M H HH

HC Workforce L M H HH

Global Interaction L M H HH

HC Investors

Private HC Funding L M H HH

Foreign Investments L M H HH

HC Consumers

Per capita spend L M H HH

Demand for HC L M H HH

Supporting Education & Training L M H HH

HC Financing L M H HH

HH- World-class


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� Ranking of Potential Healthcare Cluster Opportunity � Summary of Market Opportunity for Healthcare Sector s

� Recommendations for Shortlisted


Summary of Assessment of Healthcare Sectors

Healthcare Sectors

Govt HC Industry

HC Competitive

HC Consumer

HC Investor

Support Svcs

M HH HH H H H

Vietnam M M M M H H

Malaysia H H HH M H H

Thailand H HH HH H H H

India M M H M H H

Ranking of Potential Healthcare Opportunities- (1) China (2) Thailand (3) Malaysia (4) Vietnam

Country Govt HC Industry

HC Competitive

HC Consumer

HC Investor

Support Svcs

China M HH HH H H H

Vietnam M M M M H H

Malaysia H H HH M H H

Thailand H HH HH H H H

India M M H M H H


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� Ranking of Potential Healthcare Cluster Opportunity � Recommendations for Shortlisted


Recommended Shortlist for Consideration

Project Must Also Consider What

Value-add Partner Brings

• Re-matching Market Opportunity with Potential Value-add results in a Adjusted Ranked Recommended List

Country Market Opportunity

Ranked

Final Ranking with input

China 1 1

Vietnam 4 2

Malaysia 3 3

Thailand 2 4

China Offers Opportunity to Create a World-class He alth Services Cluster and Aged Care Community

Leverage on China’s Competitive Strengths to Create World-class Cluster

• Partner can bring Global biotech+healthcare management , IT strengths to play to create China’s most advanced health delivery infrastructure & care services

Create China’s first World-class Health Delivery Service Hub

Zhuhai

Hainan

Site Preferred Location to Tap on Access to Global Medical Tourism- Zhuhai/Hainan

Access to Univ. or Cluster Must Collaborate w Global Medical Institutions to create R&D Hub

Build advanced Hospital care facilities leveraging e-health technologies – target

treatment of chronic diseases

Create environment for high-end aged care homes and wellness care facilities

asia healthcare opportunities 2011 and beyond

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